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Bank of America Chief Technical Strategist Anticipates 10-12% Pullback In Nasdaq
Mary Ann Bartels, BofA's technical research analyst looks at the NDX large spec positions reported in last week's COT report, and does not like what she sees: "Large speculators aggressively bought NDX futures last week to a net long of $3.2bn notional from $0.8bn notional previously. Readings are in a crowded long. Between mid Feb and early April of 2010, HFs accumulated NDX aggressively into a crowded long position and S&P 500 went up 7.9% for this time period. The market corrected 10.2% from the peak crowded readings in the NDX in later April and May. We are estimating a market pullback of 10%-12%."
Of course, while this may make sense from a purely technical perspective, the fact that cross asset correlations are at a record, will mean that either the NASDAQ 100 is ridiculous overpriced relative to the Russell and the S&P, or that speculators have merely been chasing the highest beta, and a flush has yet to be confirmed based on sell off trigger levels in the SPX and the SUT.
On the S&P speculative position:
S&P 500 Large Spec positions: Large speculators partially covered their shorts in S&P 500 futures to a net short of approximately $4.1bn notional from about $8.0bn notional previously. Readings are neutral.
And on Russell:
Russell 2000 Large Spec positions Large speculators slightly covered their shorts in the Russell 2000 futures last week to roughly $2.7bn notional from $3.1bn notional previously. Readings are neutral.
Bartels summary observations on various asset flows is as follows:
- Equities. Large specs continued to cover the S&P 500 and Russell 2000 index futures but remained net short in both; they bought NASDAQ 100 into crowded long.
- Agricultures. Large specs bought Soybean but sold Wheat. Corn and Soybean remain in a crowded long.
- Metals. Large specs bought all metals last week except for platinum. Copper is in a crowded long.
- Energy. HFs bought Crude oil and marginally covered their shorts in natural gas.
Natural Gas positions remain in a crowded short. - Forex. HFs sold US Dollar last week; they bought Euro and Yen. JPY is on the edge of becoming a crowded long.
- Interest Rates. Large specs bought 2-year Treasuries; nevertheless they sold 10-year and 30-year Treasuries. This implies expectation of a steeper yield curve.
And here is how BofA estimates Hedge Fund exposure in the market:
Examining HF positioning by major strategies
Equity Long/Short funds market exposure we estimate was slightly above 18% net long, still below the historical average range (35-40%). Market Neutral funds held stead their equity exposure at just above 50% long / 50% short benchmark. Our models indicate Macro HFs continued to cover their shorts in US equities and commodities, while selling EM and EAFE long exposures.
Alas, while we respect Ms. Bartels, we have to vigorously disagree with the assumption that shorts have covered into this rally, as the last update on NYSE short interest indicates.
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Robots effing robots.
YEAH!! LISTEN TO BAC!!
And after that, let's read why Citi proposes to!
will NFLX hit $300 first?? should we all triple leverage now?
CRM is where it's at. 200x P/E. Special deal just for you.
China rebuffs EU call for rapid yuan appreciationYawn, keep buying the dips!
You do realize the market has not done anything in a year right leo.
Yawn, you are getting so old
S&P 10/1/09 close 1029.85
S&P 10/1/10 close 1146.24
Doing nothing?
right and if you bought aug. 1? how about may. 1?
If you were good enough to catch the timing in equities, you could have caught it in PM's, Wheat, Corn, etc. etc. and demolished that table scrap of a return that couldn't even outrun inflation. :D
even if you have to print the money to buy them.
Leo in his fevered mind thinks the stocks are just the bees knees, when in fact stocks are stagnant for over a decade and even the biggest bulltards around has to admit the markets are a bubble and are only being kept afloat by the most insane economic governance in history. Keep buying the dips Leo you dipshit.
Leo, Paaalleeeaaasssseeee!
Off the reservation. Better reel her in.
on my way out right now to buy, buy, buy
Apple down $17.00 in 4 1/2 trading days. Google down $26, Microsoft down 5% ...
The Fed will keeping pumping dollars into the market at all costs too stupid to realize that they are diluting the dollars purchasing power and causing commodity prices to skyrocket.
Well, if they're gonna monetize the debt, why not equities?
don't worry because america is the greatest nation on earth so just keep being patriotic and hang the flag everywhere and pray and eventually everything will be good. that's what mommy said.
Well that prediction will get shot down quickly if Apple announces they sold a gazillion gadgets in the next couple of weeks or so. On the other hand, if Apple closes below 278 today it looks like it'll continue lower technically to meet up with the 50dma soon.
Melt up today??? in advance of POMO tomorrow?
On the Agri side BHP is catching some love from Conference Board of Canada.
http://blogs.wsj.com/deals/2010/10/04/report-bhp-bid-preferential-to-sin...
She makes some interesting points. Add to them the weakness of the financial space vs the market and a case for booking recent gains seem solid:
Stock Market Strategy: Financial Sector Flashes Warning / Reduce Risk, Increase Diligence @ http://rosenthalcapital.com/blog/2010/09/stock-market-strategy-financial-sector-flashes-warning-reduce-riskincrease-diligence/
There are 2.5 Million calls on Jan 11 Citigroup. Sounds like investors are willing to bet .06 on QE2...
well i think boa has been looking into its own financial mess....jim willie reports that all of the gold sales hoopla in july by imf (international monetary fraud) was to bail out boa from bankruptcy....it suffered a near death experience that month....my guess is that the bank's days are numbered until it is merged with wachovia...
Saw a report today on the "smart money" Commercial Hedgers being at an all time record short NDX to the tune of $7.9B, a 200 percent increase from the week prior report.
Not good. NDX now seven down days in a row. Turn around Tuesday again or waterfall down? ISM services out tomorrow too.
-profd